Futures dip as Italy's deficit woes weigh
US stock index futures dipped on Friday, the last trading day of the third quarter, on worries over Italy's proposed budget, with investors keeping a close eye on a potential trade deal between the United States and Mexico.
Italy's new government proposed a 2019 budget with a deficit three times bigger than the previous administration's target, sparking a sell-off in shares in Italian banks, whose big sovereign bond portfolios make them sensitive to political risk.
Yields on the benchmark 10-year Treasury bonds ticked lower and weighed on the shares of US lenders, with Goldman Sachs, Wells Fargo and Bank of America trading down between 0.30 per cent and 0.50 per cent before the bell.
"The Italian deficit situation is leaning on stocks (futures), causing the yield curve to narrow and putting upward pressure on the greenback," Peter Cardillo, chief market economist at Spartan Capital Securities in New York, wrote in a note.
Also weighing was a pullback in the so-called FAANG group of stocks - Facebook, Apple, Amazon, Netflix and Google-Parent Alphabet - which led a rally on Wall Street on Thursday.
President Donald Trump, who wants major changes to the NAFTA, has already wrapped up a deal with Mexico and is due to publish the text on Friday. He has threatened to leave out Canada unless it signs up by Sunday.
At 7:18am ET, Dow e-minis were down 76 points, or 0.29 per cent. S&P 500 e-minis were down 7 points, or 0.24 per cent and Nasdaq 100 e-minis were down 24.5 points, or 0.32 per cent.
So far, the benchmark S&P 500 index and the blue-chip Dow Jones Industrial Average index have risen 7.2 per cent and 8.9 per cent, respectively, in the quarter and were on track for their best third-quarter performance since 2010.
Tesla tumbled 13.0 per cent after the US Securities and Exchange Commission accused Chief Executive Elon Musk of fraud and sought to remove him from his role the electric car company.
Economic data in tap includes a US Department of Commerce report at 8.30am ET, which is expected to show consumer spending rose 0.3 per cent in August, compared to a 0.4 per cent gain in July.
At the same time, another report is expected to show the yearly core PCE price index, the Fed's preferred inflation measure, increased 2 per cent in August. The monthly change is forecast to have risen 0.1 per cent.
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